HENDRINA - Eyewitness News has learnt that Optimum coal mine is now being taken to court by another mining company in an effort to have the Gupta-owned mine either placed in business rescue or liquidated.

Optimum mine owes service providers over R60 million.

Derko Mining and Exploration has filed court papers in the High Court in Pretoria.

About 2,000 workers downed tools at the Hendrina-based mine in Mpumalanga on Wednesday worried that they wouldn’t receive their salaries.

Derko mining is seeking recourse from the courts to have money paid to them.

Optimum has been given five days to file notice to oppose the matter and if Optimum fails to do this, the case will be enrolled to be heard on 27 February.

Cleaning, transportation and other service providers have not been paid by Optimum.

Workers are hoping to be paid on Friday. However, the National Union of Mineworkers (NUM) has threatened to intensify its protest if the mine fails to pay employees by Friday midnight.

The mine’s COO has told workers, who briefly demonstrated outside the mine on Thursday, that he is not sure if they will be paid on Friday.

“Bank of Baroda delays changing these dollars into rand so that I can get local currencies to pay.”

NUM branch chair Goodwill Mthombeni says the mine should brace itself for a more radical demonstration.

“People are being provoked now following the response by the COO. We believe what will happen tomorrow will be more than what has happened before.”

London – Anglo American has raised the possibility that it could start buying assets in South Africa, the latest sign of how much has changed in two years, when the miner was focused on selling.

“We no longer have any for sale sign,” Norman Mbazima, deputy chair of Anglo American’s South African unit, said in an interview on Monday. “It is possible to invest in South Africa. We have got hope right now.”

After a collapse in commodity prices in 2015, the mining blue-chip talked about selling assets in South Africa, the home of its biggest diamond, iron ore and platinum mines. While the company sold some coal and platinum mines, that policy is now dead. Some of the mines are now cash cows for Anglo as commodity prices reach multi-year highs.

“We like everything that we are in right now,” he said. “If there are opportunities to expand in those, we would.”

The company said any purchases in South Africa would have to be competitive, and deliver the right return on investment. Still, the mood in South African mining is starting to change after Cyril Ramaphosa was elected to head the ruling African National Congress.

In Davos, Ramaphosa said urgent action is needed to resolve the impasse between government and business over South Africa’s mining charter.

Anglo’s commitment to South Africa will win support from its biggest shareholders. Billionaire mining executive Anil Agarwal called the country an integral part of Anglo. South Africa’s Public Investment Corporation, the second-biggest shareholder, has also long argued for the creation of a domestic mining champion.

“We have no intentions of spinning off Anglo Platinum to a localised company,” Mbazima said of the company’s platinum unit.

JOHANNESBURG – South Africa’s Kumba Iron Ore, a unit of Anglo American, and a major union have signed a three year wage deal giving workers an increase of much as a 10% a year, the National Union of Mineworkers (NUM) said on Friday.

NUM, which is the majority union at all of Kumba’s operations, said workers would get an annual pay rise ranging between 7% to 10%.

The parties also agreed a once off payment of R25 065 ($1 905) for all employees covered by the agreement.

NUM in May tabled wage hike demands of 12.5% to 16% with Kumba.

The pay deal is good news for the troubled mining sector in South Africa. Investors have been rattled in recent months by labour unrest, policy uncertainty and depressed commodity prices.

Coal producers and unions agreed in June to retain a collective bargaining framework for wage talks in 2017, defusing friction after NUM threatened to go on strike if mining firms negotiated on a company-by-company basis.

In the next ten years, technology is set to unleash a wave of mining innovation, with the sweet spot centred on changing the thinking around ore bodies and processing plants rather than much-spoken-about automation.

Three-dimensional metal printing, non explosive breakage of rock and microwave preconditioning of rock, as well as medical imaging equipment, are finding rapid application in mineral mining and processing.

The word in the industry is that mining companies that embrace the new era will be successful and the ones that do not will ultimately not survive. Anticipated are mines with footprints that can more readily coexist alongside a community in much the same way as farming.

The good news is that pathways are already starting to develop that change the current mining and processing paradigm.

Technologies are being reconfigured to make mining and processing far more precise, which offers massive potential reward.

Currently, much larger volumes of waste are brought to surface, compared with the scenario more than a century ago. This is because, outside of safety improvements, old methods are still being used today. For instance, in 1900, to obtain 40 kg of copper, 2 t of material had to be mined using 3 m3 of water and 10 kWh of energy, compared with currently having to mine 16 times more material, using 16 times more energy and drawing on double the volume of water.

“It’s risen at such a rate that it’s becoming unsustainable,” O’Neill commented to MiningWeekly Online.

While mining was, in the past, content to be a research and development laggard, other industries were not – and they shot ahead on the technological front, proving up technology that is now available off the shelf for mining to implement.

A successful pilot plant is already pointing the way for the more widespread introduction of coarse-particle recovery, which brings considerably larger-sized particles to surface and slashes water use.

Moreover, with the maturing of robotics technology, research is also being conducted into the introduction of swarm robotic mining, involving the use of small robots that will bring ultra-precision to a hugely wasteful industry.

As more precise mining methods gather momentum, those 40 kg of copper used to illustrate mining’s deteriorating position may one day be mined without any waste at all.

Coarse-particle recovery and advanced fragmentation (using smart blasting technologies) are good examples of putting existing technologies into new configurations to deliver value right now.

None of the technologies used is unproven, but what Anglo has managed to do is configure them in a way that adds immense value, with minimal additional capital investment.

While technology will have to be honed specifically for mining at some stage, a surfeit of technologies is ready for instant application.

“It’s more about a mindset change than having to make massive investments,” Anglo American technology development head Donovan Waller added to MiningWeekly Online.

Much of the improvement is being driven by data science and the modern world’s ability to analyse increasing volumes of data to a very high degree.

Virtually all the technologies needed have come of age; one of the biggest being the stabilisation of information technology, in which other industries have tended to advance much faster than the mining industry. These other industries include consumer electronics, manufacturing, automotive engineering and the pharmaceutical sector.

COARSE-PARTICLE RECOVERY

The coarse-particle recovery process captures coarse particles that are not recoverable using conventional flotation.

By needing to grind to only 500 micron instead of 170 micron, capacity is increased. Less energy is required in the crushing and grinding and water is more easily extracted from the larger particles and then recycled, significantly reducing the need for fresh water. The extraction of interstitial water results in a dry product, which can be dry-stacked, ultimately eliminating the need for tailings dams.

In copper, coarse-particle flotation has the potential to change the cost curve of the industry by allowing for 30% to 40% more throughput at a recovery loss of 2% to 3%, a 20% energy saving and 30% to 40% less water.

This is already a significant achievement for Anglo American in copper, and the company is hopeful of migrating it to other commodities, including platinum in South Africa, where test work is still at an early stage.

If, for example, platinum ore can be pre-sorted in advance and be presented at a grade of 10 g/t instead of 4 g/t, output can be increased by two-and-a-half times from the exact same capital invested.

SWARM ROBOTIC MINING

Swarm robotic mining descales mining to make it much more precise, mimicking the actions of a swarm of locusts devouring a field or an army of ants working independently to execute tasks.

The technology envisages highly selective mining of ore types linked to real-time algorithms across a broad spectrum that includes constraints in energy, prices and associated issues.

As many people as possible are taken out of harm’s way in a remotely controlled environment.

Small operational teams will communicate with each other, without the need for a big-brother view from the surface that controls each of those small operational elements independently in self-learning operations.

WATERLESS MINES

Currently, the industry spends a lot of time adding water to its processes and even more time trying to get the water out afterwards.

A pathway has been developed to end up with a waterless mine through the adoption of a closed loop, using only a fixed amount of water that is then recycled time and again. Anglo already recycles or re-uses more than 60% of its water requirements.

Ultimately, the aim is to arrive at potentially chemical means that allow for the liberation of particles without having to add water to them, to arrive at a waterless process.

SUN, WIND, GRAVITY AND SMALL, GREEN NUCLEAR

In terms of energy, the focus is on using renewables for energy self-sufficiency.

The solutions will be a combination of sun and wind. As the sun does not shine at night and the wind does not always blow, other energy forms, including gravity, will take advantage of the mining sector having depth as one of those solutions.

Ultimately, nuclear may be incorporated should it become “greener”, smaller and more modular, as is expected.

MODULAR CONCEPT

Instead of spending billions to build one big plant, small modular plants will be built and scaled up quickly, with the lifespan of the modules being influenced by the next step up in technology.

Mines will move away from using the same technology for long periods of time and outlaying large capital expenditure on plants that last for 50 years and more.

Smaller, modular, cheaper units will allow for technology upgrades every five years, providing scalability as well as the opportunity to ramp up on new technology that has arisen.

Although mining is not an industry that has been used to technological change, there is no reason why it should not, from now on, accelerate advancing technology quickly, as other industries do.

“Our Future Smart Mining program is about far more than technologies alone. It is end-to-end innovation, in its broadest sense, addressing all aspects of sustainability for the business – safety, health, the environment, the needs of our communities and host governments, and the reliable delivery of our products to customers. Those that innovate and are agile will thrive in this industry. That is mining’s new future.” O’Neill concluded.

Despite the current economic climate in South Africa and the global downturn in mining, owing to low commodity prices, South Africa and Australia will continue to build their reciprocal trade relationship, says law firm ENSafrica.

“South Africa is Australia’s biggest trading partner on the African continent and Australia has more mining projects in Africa than anywhere else in the world,” ENSafrica mining directorLloyd Christie tells Mining Weekly.

He adds that Australia looks westward for investment opportunities and recognises South Africa as its port of entry into Africa and the Southern African Development Community, which includes 15 African countries. “Australia continues to build on a constructive and mutually beneficial business relationship with South Africa.”

South Africa and Australia have similar legal systems, business cultures and practices, as well as accounting practices; and both countries are also well endowed with mineral resources and technical expertise, says Christie.

These common traits make it easy to facilitate trade and, with the two countries forming the Australia–South Africa Joint Ministerial Commission in 1997, collaboration has increased ever since, he elaborates.

To aid continued collaboration, the Australia–Africa Minerals and Energy Group was established in 2010 to facilitate active engagements between the continents’ mineral resources industries.

Christie points out that, according to employers organisation the Australian Industry Group, there has been a 10% yearly average increase in trade between South Africa and Australiain the past five years.

“This serves as motivation to reinforce the relationship with Australian counterparts and continue attending events that facilitate trade.”

Therefore, ENSafrica will attend the annual Africa Down Under conference for the second time from September 6 to 8 in Perth, Western Australia, to interact and network with clients and investors, and learn about the latest developments in mining in Australia and Africa.

Further, Christie says legal certainty, which is an issue in some African countries, is often a consideration for investors, especially foreign investors such as Australia, when deciding to enter new markets.

“Africa’s labour unrest and factious industrial relations might also scare off mining investors. But, with the global miningindustry having to endure depressed commodities markets for many years, volatility is a natural consequence in any mining jurisdiction.”

He adds that declining commodity prices and profit margins can, ultimately, put strain on employee circumstances, as companies threaten retrenchment and are unable to increase wages. This is not unique to Africa, and is typically not an environment conducive to investment.

Regardless, there are still indicators of continued interest and investment in South Africa and other African countries, says Christie.

ENSafrica mining director Ntsiki-Adonisi Kgame says Australian mining companies still remain significant employers in Africa, which also encourages innovation and skills transfer between the involved countries.

“We’ve seen skills migration from South Africa to Australia, especially in terms of deep-level mining expertise. Australiahas recognised South Africa’s proficiency in this regard and has benefited from that skills transfer.”

ENSafrica plays a significant role in representing South African and Australian mining entities – such as diversified miners BHP Billiton and South32 – when navigating mergers, legislation and general trade issues regarding mineral resources.

Royal Bafokeng Platinum CEO Steve Phiri said on Tuesday that he was “very encouraged” by the stance taken the day before by the National Union of Mineworkers (NUM) and the ruling African National Congress (ANC).

“We can only improve the situation if we work together and not against each other,” Phiri outlined to Mining Weekly Online in an interview after the company reported a R31.9-million loss in the first six months of this year. (Also watch attached Creamer Media video).

“We’re very encouraged by the statements released by ANC yesterday and this morning, which raises serious concern about the damage Mining Charter Three does to the mining industry and the economy of this county.

“We hope that we’ll see something different in a few days, few weeks, few months to come,” said the head of the 52% black-community-owned Johannesburg Stock Exchange-listed platinum mining company.

On Monday, NUM expressed fears that the South African mining sector, which had already shed more than 80 000 jobs over the past five years, would shed tens of thousands more jobs and called for the resignation of Mineral Resources Minister Mosebenzi Zwane, citing a complete breakdown in relations.

Phiri described as “very encouraging” the supportive comments of ANC Secretary General Gwede Mantashe, who in an interview with Radio 702 host Xolani Gwala referred to the private sector, the government and the ANC as being economic partners.

LOSSMAKING PLATINUM SECTOR

In the tough economic environment which has resulted in 70% “or more” of the platinum industry being lossmaking, Royal Bafokeng Platinum has been forced to respond by discontinuing mining upper group two (UG2) reef at the Bafokeng Rasimone Platinum Mine’s (BRPM’s) South Shaft, restructuring to match to the declining South Shaft resource, lowering unit costs to below the consumer price index, increasing tonnes milled by 14.3% and holding down year-on-year unit costs at BRPM.

Capital expenditure (capex) at the Styldrift 1 expansion, on which R7.23-billion has been invested to date, has been tailored to a 150 000 t a month ramp-up in the last quarter of 2018.

Company funding has been bolstered by the raising of a R1.2-billion convertible bond and the concluding of debt facilities totalling R2-billion.

Against this arduous backdrop, Phiri, who leads a 52% black-owned company, has refused to mince his words in condemning South Africa’s legislative and mining policy environment.

“We certainly can do better without the value-destructive Mining Charter Three. How the industry is supposed to understand and comply with it defies any stretch of the imagination,” said Phiri, 61, a former public prosecutor, who decried the document as “shabbily drafted, confused and ambiguous”.

He reminded the government that many still toiling in the mining industry had also helped to transform the sector by playing key roles in the formulation of the Mineral and Petroleum Resources Development Act in 2002 and 2003 – “from nothingness, where the industry gave up private ownership of mineral rights, and shareholders sacrificed equity without any compulsion”.

The first and second mining charters also came about by participants willingly shedding value through negotiation.

He condemned those latecomers who now condemned such trailblazing transformers as being anti-transformational.

As a crucial Constitutional imperative, transformation should come by way of a charter that was realistic, achievable and sustainable and not something that caused economic downfall.

“Transformation should not, as a matter of principle, be used as a populist football. We should not produce an unrealistic and unachievable piece of work and sugar-coat it as transformation, when it is so bitter and unpalatable to the core.

“It will implode on us, certainly. The industry will fall flat, capital will be chased away and so will growth remain a myth. Jobs will be lost.

“We hope that, in the end, wisdom will prevail and a realistic charter, with realistic targets, will be achieved through honest and meaningful engagement,” he said.

STYLDRIFT PROJECT

Royal Bafokeng Platinum reported a 70% increase in tonnes delivered from Styldrift, an 8.9% improvement in tonnes milled per employee, a 9.4% increase in four-element (4E) metals in concentrate and zero fatalities in the six months to June 30.

The low price environment resulted in a 9.8% reduction in average rand revenue basket price, earnings before interest, taxes, depreciation and amortisation being cut by two-thirds to R100.4-million from R305.3-million in the same period last year, and headline earnings per share collapsing to 15.3c a share from 77.8c in the corresponding period of last year.

But despite the stringency, the company remained steadfast in spending R15.9-million in the half-year on its social and labour plan commitments, which was up on last year’s R13.8-million.

Moreover, 86.3% of its total discretionary procurement spend was with historically disadvantaged companies.

The closure of the nonprofitable South Shaft UG2 production sections and redeploying 60% of the UG2 mining crews to superior-margin Merensky at South and North shafts and UG2 production at North Shaft has enabled the company to maintain current levels of platinum group metals production but with the enhanced effect of the base metals revenue that accompanies Merensky production and optimised processing arrangements equating to
R37-million a year.

Net revenue decreased by 3.2% from R1 646.9-million in the first half of 2016 to R1 593.9-million for the first half of 2017.

The company’s gross profit margin reduced from 11.4% for the first six months of last year to 0.7% for the six months ended June 30 this year on the 3.2% decrease in net revenue and the 8.5% increase in total cost of sales.

Total capex for the period under review increased by 63.8% to R847-million on the first half of last year.

Replacement capex fell by R33-million to R10-million and expansion capex increased by 86.1% to R778-million on the acceleration of construction at the Styldrift I project.

Stay-in-business capex increased by 5.4% to R59-million.

The total mining scope of the BRPM Phase III replacement project has been completed with only construction activities related to services, conveyor belts and associated bulkheads on 14 and 15 levels remaining.

A technical planning review of the Phase III extraction schedule has indicated that these levels will only be required to come on line during the second quarter of 2019, allowing capex to be deferred to 2018 without any negative impact on extraction.

During the reporting period, a total of 3 328 m of capital development was completed on 600 and 642 levels of Styldrift I, with 238 000 t of ore being delivered to the concentrator at a built-up head grade of 2.53 g/t 4E.

In line with project execution resource requirements, there are 23 mining and construction crews operational on site.

MARKET REVIEW

The platinum price started the year close to $900/oz., rose to above $1 000/oz. in February, but subsequently weakened to end the first half not far above where it started the year. The rand remained relatively strong against the US dollar in the first half of 2017 at around R13.20. This led to platinum prices in rand terms dipping below R12 000/oz. on a number of occasions during the first half of 2017, to lows not seen since November 2015.

Platinum production is forecast to be 2.5% lower this year as both primary and secondary supply ease. Primary supply is estimated to be down 2% year-on-year on lower output from Southern Africa. Secondary supply is expected to contract as lower recycling of jewellery in China is likely to more than offset a modest recovery in auto catalyst recycling.

However, lacklustre platinum prices are reflecting limited buying by end-users as overall demand, excluding investment, is forecast to soften year-on-year.

Western Europe remains the largest diesel market, but diesel market share continues to decrease, particularly in the small car segment.

Diesel share in larger cars remains relatively stable, while in heavy-duty vehicles, diesel is currently the only viable option.

Purchasing of platinum by Chinese jewellery fabricators in platinum’s largest market has not improved from a weak 2016. Platinum trading on the Shanghai Gold Exchange in the first half of 2017 was a third lower than in the first half of 2016, although this reflects industrial as well as jewellery demand.

Investment demand has been steady so far this year with platinum exchange traded funds (ETFs) adding 83 000 oz in the first six months, resulting in global ETF holdings increasing to about 2.6-million ounces. Platinum bar purchases were low in the first quarter owing to the high platinum price. However, weaker prices during the second quarter lifted buying.

Overall, the industrial market balance is projected to be in a modest surplus in 2017. If the platinum price remained weak in the second half of the year this would raise the risk of closures of unprofitable mining areas which could move the market closer to balance.

Palladium started the year trading at $676/oz and although volatile, the price continued to trend higher through the first six months of the year. Temporary tightness in palladium ingot availability resulted in the price briefly pushing through $900/oz in June before it eased back to end the month at $842/oz, up 25% for the year to date.

Palladium demand is expected to be little changed in 2017 as a slight increase in auto catalyst demand is offset by small declines in jewellery and industrial usage.

The rhodium price has continued its recovery in 2017, rising 35% to $1 040/oz during the first half of the year. However, while the price may have improved, the market still remains well supplied. Removal of unprofitable ounces from the market could move the market close to balance or into slight deficit.

Executives from Sibanye Gold Ltd., South Africa’s biggest gold miner, were in Los Angeles in the final stages of a roadshow with U.S. bond fund managers last month when a bombshell hit from back home.

The government had introduced shock new rules requiring local mines be 30% black-owned in perpetuity, toughening existing requirements and implying hefty dilution for shareholders. South African stocks tumbled and bond yields rose that day. The measures, called Mining Charter 3, put at risk funding for Sibanye’s $2.2 billion acquisition of Stillwater Mining Co. of the U.S., the biggest foreign takeover by a South African mining company in 16 years.

“We had to hold back the financing, find out what the chartermeant, and rebrief all our potential investors,” Chief Executive Officer Neal Froneman said by phone. “A number of institutional investors pulled out of the bond process saying the risks in South Africa were just too high and it’s becoming uninvestable.”

Companies and investors say the new rules and uncertainty will starve the industry of much-needed capital, shortening mine lives, reducing profits and adding to existing challenges of declining reserves and increasing costs. Most mining companies already offloaded 26% stakes and even entire mines to black investors at preferential rates in the 2000s to comply with previous rules, believing it was a one-time deal.

President Jacob Zuma backed the charter in parliament last month as part of his “radical economic transformation” agenda, intended to boost black participation in an economy that’s still one of the most unequal in the world, 23 years after Nelson Mandela helped end apartheid. But members of the African National Congress party, including Deputy President Cyril Ramaphosa, have signalled their doubts, saying the government and industry should go back to the drawing board and reach a negotiated settlement.

Mining companies have already begun fighting the charter through the courts and say the uncertainty will scare off investors in a country once seen as model of democracy, reconciliation and open markets in Africa. The first lawsuit, to block the charter while it winds through the legal process, has an initial hearing on July 18.

The legal cases “could potentially take three years to conclude,” said Victor von Reiche, an analyst at Citadel Wealth Management in Cape Town. “In the meantime the mining industry in South Africa will suffer most, as investors will take a wait-and-see approach.”

The charter imposes numerous extra levies on mining, the country’s biggest export industry, at a time when the economy is in recession and suffering from 28% unemployment. It also directs payments that the industry estimates could amount to 3.5 billion rand ($264 million) into a government-controlled fund that will also manage communities’ stakes in mines.

Sibanye managed to complete the bond sale, but at a cost. It’s paying coupons of 6.125% and 7.125% on two bonds worth $1.05 billion, 50 basis points higher than if the government had not published the charter, according to Froneman. The extra interest is worth $5.3 million a year.

“This is bad news for mining, which was already shrinking due to the commodities cycle,” said Dave Mohr, who helps oversee 110 billion rand as chief strategist at Cape Town-based Old Mutual Multi-Managers. “It’s going to scare off investment while they go through the courts.”

The Chamber of Mines, which represents mining companies, has taken the government to court to block the charter and argues that it’s in breach of company law, international agreements and the country’s constitution.

The most controversial of the new rules is around ownership. The charter says mining companies must “top up” black ownership to 30% within the next 12 months. But the firm says it’s unclear whether they must increase from 26% or the current direct black ownership level.

A rule requiring 1% of revenue to be paid to black investors before other shareholders would have consumed 95% of total industry dividends if applied last year, according to the chamber.

MAKING SENSE

“We are struggling as everybody else to try and make sense of this charter,” said Andile Sangqu, speaking in his position as vice president of the Chamber of Mines. “That’s why we’ve opted to go to court.” Sangqu is also executive head of Anglo American Plc’s South African operations.

Mining Minister Mosebenzi Zwanedefends the new rules, saying they are necessary to resolve the inequities of apartheid. As the world’s biggest gold producer for a century to 2007, South Africa’s mining industry was a key beneficiary of white minority rule, which ensured cheap labor and few environmental regulations.

More than two decades after that ended, average earnings for black households are a sixth of those of their white counterparts, according to the nation’s statistics agency.

“Anybody who does not want to see black people empowered, anybody who still wants to see black people treated like slaves, raise up their hands and say they are not part of the progressive South Africa,” Zwane told reporters June 23, referring to the charter’s critics.

The regulations’ timing couldn’t be worse. The economy unexpectedly tipped into a recession in in the first quarter, and business confidence reached a more than three-decade low in September, amid political uncertainty. Though the June reading improved, the new mine rules pared its gain.

While South Africa’s mining industry is a shadow of its former self — it peaked in the 1970s — it still represents 21% of exports and employs 457 000 people, about 7% of total employment. Many mineworkers migrate from rural areas and have as many as 10 dependants.

Investors aren’t waiting for the court decision to make a call on South African mining securities. About $3 billion was wiped off Johannesburg-listed mining companies’ market value on June 15, when the charter was announced, although a U.S. rate rise the previous evening also hit commodities stocks globally.

South African mining stocks have traded at a price to book discount for the last five years, according to data compiled by Bloomberg.

If the charter is implemented, shareholders are likely to push back on providing more equity to fund additional black empowerment deals, according to Douglas Rowlings, a Dubai-based analyst for Moody’s Investors Service. That means mining companies would be forced to use existing cash reserves or borrow money.

“That’s a credit negative from our point of view,” Rowlings said. “The market response was hugely negative and contrary to the ANC’s policy of fostering inward investment into South Africa. The effect of the mining charter is totally opposite to that and would result in job losses.”

Sub-Saharan Africa’s mining sector will remain the riskiest in the world over the next few years on the back of policy uncertainty, underdeveloped infrastructure and political risk.

BMI Research on Monday said that, overall, sub-Saharan Africa scored 38.9 points out of 100 – behind all other regions – in the global Risk/Reward Index (RRI).

This was a result of low scores in country risk, industry risk and business environment indicators.

The firm pointed out that a series of regulatory changes across major mining countries eroded investor sentiment, leading to policy uncertainty, with the region further threatened by underdeveloped infrastructure and high political risk.

“Policy uncertainty will be a particularly pertinent theme that will hamper growth opportunities in sub-Saharan Africa in the coming years as major mining markets in the region make changes to their regulatory frameworks,” BMI commented.

Ghana will be the region’s best performing country with a strong industry risk profile, surpassing the European average.

“Ghana has improved its score from 53 during the last quarter up to 55.5 currently, allowing the country to leapfrog South Africa and Botswana and come top of our regional scores,” the firm highlighted, pointing out that all three countries were expected to perform well on a variety of business environment indicators.

The three countries obtained an average aggregate score of 54.1 on the RRI, slightly above the Americas region average of 50.1, but still below the Asian regional average of 56.1.

“This score reflects miners’ on going priorities to tread carefully and avoid overexposure to high-risk environments as they look to improve balance sheets rather than engage in risky growth ventures,” BMI said.

Further, infrastructure deficits and high political risk solidified the position of Sierra Leone, Liberia and Mauritania as regional laggards and the three worst performing countries on the index.

Mauritania, in particular, has seen its score fall from 26.5 during the last quarter to just 20.7 currently, as a result of a less favourable risk outlook.

The Department of Mineral Resources has approved the transfer of the Lesedi mining right from South African subsidiary International Ferro Metals Limited (IFMSA) to Samancor Chrome, London-listed International Ferro Metals (IFM) said on Thursday.

Once registration of the cession of the Lesedi mining right at the Mineral and Petroleum Titles Registration Office gets under way, a process that takes four to eight weeks, a R140-million purchase consideration will become payable by Samancor.

“The proceeds will be distributed to creditors of IFMSA in accordance with the amended business rescue plan,” IFM said, pointing out that it was not likely that IFM’s shareholders would receive any distribution from the conclusion of the business rescue process.

Further, the conditions are in the process of being fulfilled for the remaining transaction – the sale of IFM’s 80% equity interest in Sky Chrome Mining for R100 and IFMSA’s claims against Sky Chrome for R70-million.

“The outstanding conditions include obtaining regulatory approvals, specifically Ministerial approval for the transfer of the Sky Chrome mining right and consents of other parties to certain material contracts, which are usual for transactions of this nature,” IFM stated.

IFM entered into business rescue in August 2015 after falling into financial distress, owing to deteriorating business conditions. It subsequently agreed to sell its IFMSA subsidiary to Samancor.